(MULTIPLE-CHOICE SAMPLE Sample Multiple-Choice Questions Circle the letter of each correct answer. 1. A downward sloping demand curve can be explained by 1. diminishing marginal utility. I. diminishing marginal returns. Il. the substitution effect. IN. the income effect (a) Lonly (B) HLonly (©) Land IH only (D) Land LV only (E) 1, Mand IV only 2. Which of the following will nor change the demand for oranges? (A) A change in consumers’ incomes {B) A change in the price of grapefruits, a sub- stitute for oranges (©) A change in the price of oranges {D)A change in consumers’ taste for oranges (B) An expectation that the price of oranges will increase in the future 3, If there isan increase in demand for a good, ‘what will most likely happen to the price and quantity of the good exchanged? Price Quantity, (A) No change No change (B) Increase Increase (©) Increase Decrease (D)Decrease Increase (B) Decrease Decrease 4, If hot dogs are an inferior good, an increase in income will result in (A) an increase in the quantity demanded for hot dogs. (B) an increase in the demand for hot dogs. (C)a decrease in the quantity demanded for hot dogs, (D) a decrease in the demand for hot dogs. (B) no change in the quantity demanded for hot dogs. 5. An increase in the price of gasoline will cause the demand curve forties to shift in wich direction? (A) To the left, because gasoline and tires are substitutes (B) To the left, because gasoline and tives are complements (C) To the right, because gasoline and tires are substitutes (D)'To the right, because gasoline and tires are complements (£) To the right, because an increase in the price cof gasoline makes consumers poorer and thus not willing to pay as much for tres 66. Assume that coal is a normal good. If the price of coal increases and the quantity sold increas- 5, which of the following is consistent with, these observations? (A) The price of oil increased, oil and coal being substitutes. (B} A wage increase was given to coal miners. (©) New machinery made coal mining more efficient. (D) Consumers’ incomes fll. (E) The demand curve is inelastic. “vant enon room cosa: Std Aes © Nato Connon ras aan, Nowak m7. During a football game, it starts to rain and the temperature drops. The senior class, which rruns the concession stand and is studying eco- nomics, raises the price of coffee from 50 cents to 75 cents a cup. They sell more than ever before. Which answer explains this? (A) The supply of coffee increased. (B) The demand curve for coffee was elastic. (C) The supply of coffee decreased. (D) The demand for coffee increased. (E) The demand curve for coffee was inelastic. 8. Which of the following statements best reflects the law of diminishing marginal utili? (A) “Thave to have a scoop of ive cream on my pie” (B) “Pil never get tired of your cooking.” (C) “The last bite tastes just as good as the first” (D) *T couldn't eat another doughnat if you paid me” (8) “L prefer to eat several small meals a day, rather than three large ones.” 9. Which of the following will not cause the demand curve for athletic shoes to shift? (A) A change in tastes for athletic shoes (B) Widespread advertising campaign for ath- letic shoes (C) Increase in money incomes of athletic-shoe consumers (D) Expectations that the price of athletic shoes will decrease in the Future (E) A decrease in the price of athletic shoes MULTIPLE-CHOICE SAMPLE QUESTIONS (conics) 10, Assume that the demand for apples is down= ‘ard sloping. If the price of apples falls from §.80 per pound to $.65 per pound, which of the following will occur? (A) A.smaller quantity of apples will be demanded. (B) A larger quantity of apples will be demand- ed. (C) Demand for apples will decrease (D) Demand for apples will increase. (E) Supply of apples will decrease. PRICE ‘quantity 11, On the graph above, what area represents con- sumer surplus when the price is $10? wa we moc (D)A and B (E) Band C m2 ‘vane Bcmen anon Mitosis Stes Acris © Nena eal on Eso Eaton. Now Wek NY12, Ifthe cost of producing automobiles increases, the price, equilibrium quantity and consumer surplus will most likely change in which of the following ways? Price Quantity Consumer Surplus (A) Increase Increase Increase (B) Increase Increase Decrease (©) Increase Decrease Decrease {D) Decrease Increase (E) Decrease Decrease Decrease Decrease 13, Compare 2000 with 2001. Which of the following statements is (are) true? Year ___ Quantity Sold_Price 2000 30,000 s10 2001 50,000 $20 1. Demand has increased. Il. Quantity demanded has increased. TL, Supply has increased. TV. Quantity supplied has increased. V._ Supply has decreased. (A) Lonly (B) Vonly (C) Land IV only (D) Lang V only (E) 1, Wand I only 14, Producer surplus is the (A) area under the supply curve to the left of the amount sold. (B) area under the supply curve to the right of the amount sold, {C) amount the seller is paid plus the cost of production, (D) amount the seller is paid less the cost of production. (B) cost to sellers of participating in a market. MULTIPLE-CHOICE SAMPLE QUESTIONS (commen 15, During the 1990s; the price of VCRs fll by about 30 percent, and quantity sold decreased by the same amount. The demand for VCRs must (A) be inelastic. (B) be elastic. (C) be unit elastic (D) have shifted to the right. (E) have shifted to the left. 16, Which of the following will occur if legal price floor is placed on a good below its free- market equilibrium? (A) Surphuses will develop. (B) Shortages will develop. (C) Underground markets will develop. (D) The equilibrium price will raion the good, (E) The quantity sold will increase. 17. A marketing survey shows that gate receipts ‘would increase if the price of tickets toa sum- ‘mer rock concert increased, even though the number of tickets sold would fall, What does this imply about the price elasticity of demand for concert tickets? (A) Demand is inelastic. (B) Demand is elastic. (C) Demand is unit elastic, (D) Demand is perfectly inelastic. (E) Demand is perfectly elastic. “Rivnce icemeat ono Bivonooomis Side Ae © Naan] Counc en Eanonic yee New Ya, NY 13